The 6 Biggest Challenges Facing South Sudan’s Economy

Bank Note - 100 SSP

Next time you meet a member of the government or the legislative assembly, ask them what he or she has done recently to address these big challenges. Because unless addressed, you will struggle to buy your food, pay your children’s school fees, improve your house or pay for your medical treatment.

1. Conflict & Instability

From cattle rustling to tribal skirmishes to the full scale civil war that’s currently swallowing the country, South Sudan hasn’t seen a year of peace since independence. This instability is bad for business. It scares away foreign direct investment and reduces confidence among citizens, resulting in those with means keeping their money abroad where it is of no help to our economy. But think about all that instability another way – for each citizen, the government spends $90 per year on the military alone. Deduct government salaries and operating costs, and you’re left with only $24 spent per year for that citizen on health care, education, infrastructure etc. Very little is going into stimulating business.

2. Poor Infrastructure

I’ll just focus on the roads. If you’ve ever driven anywhere in South Sudan, you’ll know the road network is bad. I mean really bad. Not only do these bumpy dirt tracks restrict access from one region to another, but they cost businesses money to use – and I’m not talking about those illegal ‘tax’ checkpoints either. In fact, 60% of South Sudanese businesses rate transport as a severe obstacle to trading. Bad roads means smaller loads and much longer travel times to get those goods to market. All this adds cost. Freight trucks drive an average of 6.4 km per hour so moving perishable goods, like foodstuff, is a big problem.

3. Dependence on Oil

As the old saying goes; never put all your eggs in one basket. But that’s exactly what the government of South Sudan has been doing. According to the World Bank, South Sudan is the most oil-dependent country in the world, with oil accounting for almost the totality of exports, and for around 60% of our gross domestic product (GDP). Diversifying the economy took a back seat when the oil money was flying in. Now with production falling to below 160,000 bpd and the decline in oil prices from $110 per barrel to $55 per barrel, our economy is dangerously exposed.

4. Dependence on Imports

We have virtually no manufacturing or commercial agricultural base or services sector. So, we have to import everything. The money we earn from oil is spent abroad on purchasing essentials, leaving precious little to stay in circulation inside the country. Any drop in the value of SSP will result in prices going up. Its impossible to keep the value of SSP high without something to secure it against. Here is where the fall in oil prices is really going to hurt us.

5. Low Human Capital

South Sudan has one of the world’s lowest adult literacy levels. Only one in three South Sudanese can read and write. 4 out of every 5 of the working population are engaged in non-wage work, mainly in small scale farming and cattle herding. As a nation, we’re largely unskilled and uneducated. This makes our country extremely unattractive to do business in.

6. Informal Economy

4 out of every 5 citizens live in rural areas far from population centres. I’ve already mentioned that 4 out of 5 people are engaged in non-wage work. No wages, mean no taxes. No taxes, mean no government revenue to investment in infrastructure and the delivery of services that can create wage paying jobs. This is a vicious cycle.

The economy matters. Make sure it matters to those who represent you in government.